Is Qualcomm One of the Best Companies in America?

The Motley Fool recently released its list of The 25 Best Companies in America, which includes the cream of the crop of the U.S. stock market. Yet during the process, we also found some other promising companies that almost made the final cut. One of those companies is Qualcomm (NASDAQ: QCOM) , which definitely deserves at least an honorable mention for its achievements.

The case for QualcommAmong all the companies that bring consumers the smartphones, tablets, and other mobile devices that have come to dominate our culture, Qualcomm isn't a household name. But as the chip maker that has arguably done more than any other player in its industry to further mobile innovation, Qualcomm has taken over the leadership role in the industry that once belonged to Intel (NASDAQ: INTC) , surpassing the microprocessor giant in market cap for the first time last November. With PCs giving way to mobile devices, Qualcomm's focus has clearly been in the right direction. Moreover, with a huge array of intellectual property that it has developed and accumulated over the years, Qualcomm has leverage to take its knowledge and apply it to growing areas around the world.

The key to Qualcomm's success has been remaining agnostic about platform. With the company serving both iPhone and Android platforms, Qualcomm doesn't need to predict which one will prove to be the eventual winner. Its only concern is that its customers adopt its technology in some form, and that the ultimate consumers who buy products from Qualcomm's customers like them enough to promote sales and profits both for Qualcomm and its customers. So far, that strategy has worked extremely well.

How Qualcomm treats its stakeholdersQualcomm works not only to serve investors but also to provide a strong customer experience and a comfortable and productive work environment. For its employees, Qualcomm ranks highly for overall experience, with favorable work-life balance, relationships with bosses and co-workers, growth opportunities, and overall corporate culture all contributing to the company finishing No. 4 on CareerBliss.com's survey of 2011's happiest companies in America. Qualcomm also does quite well on Glassdoor, earning an 87% rating from the employee-satisfaction company.

For Qualcomm's customers, the biggest strength the company offers is its network effect. Even in the face of fast-paced innovation, Qualcomm has achieved production consistency that allows it to deliver high-quality products to a wide range of customers. Although it uses third-party fabrication sources that occasionally produce production bottlenecks, the company has overall managed to keep its supply chain relatively clean.

Investors certainly have to be happy with Qualcomm's results. Over the past 20 years, the company has averaged annual returns of nearly 25%, with a still-respectable 15% growth clip over the past decade. With profit margins of over 30%, Qualcomm easily eclipses both Intel and up-and-coming competitor NVIDIA. Moreover, the impressive pace of growth in revenue is seen continuing this year and next, and even as it slows somewhat, the company should still be able to convert sales into profits.

Qualcomm also reaches out to the communities it belongs to. With its Qualcomm Hall, the company celebrates its hometown of San Diego by offering a 500-plus seat venue for arts organizations and other nonprofits. It also encourages employee volunteering and has a corporate foundation that emphasizes education, health, and cultural enrichment.

The case against Qualcomm Qualcomm's main weakness comes on the customer side, where the company gets particularly low ratings on cost, distinctiveness of products, and simplicity of use. Yet whenever a company like Qualcomm has command of a vital resource, it's natural for customers to have complaints about the way it does business. The fact that Qualcomm's customers are still dependent on its products guarantees loyalty as long as those products are superior to those of its competitors.

Does a 25 Best snub put a chip on Qualcomm's shoulder?Given its growth prospects, Qualcomm continues to be a strong company for investors to look at more closely. With a happy set of employees, Qualcomm may not always make its intermediate customers happy, but as long as the consumer products those customers create remain popular, Qualcomm will continue to benefit. Even though Qualcomm didn't end up making the Best 25 list, it definitely deserved the distinction of being one of companies that made it into the group of 40 or so finalists in our selection process.

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